Lipid bilayer vesicles containing a high concentration of the fluorescent dye carboxyfluorescein are used to study mechanisms of interaction between liposomes and human peripheral blood lymphocytes. Self-quenching largely prevents the dye from fluorescing as long as it remains trapped at high concentration in vesicles. Relief of self-quenching as the dye is released into the much larger volume of the cell is a measure of transfer of liposome contents to cell. Transfer into the cell is distinguished from stable absorption onto the cell surface by fluorescence microscopy, fluorometry and flow microfluorometry. Vesicles made up of neutral lipids, which are in their liquid-crystalline state, transfer their contents to cells, with no significant amount of stable adsorption to the cell surface. The effects of lipid composition, potential "fusagens" and serum components which inhibit transfer are studied. When vesicles containing a fluorescently labeled lipid are incubated with lymphocytes, the label does not spread out over the cell membrane.